Sin taxes hit smokers hard

Of all the
so-called sin taxes, smokers have been hit hardest. More leniency has however
been shown in other areas in Wednesday afternoon’s National Budget.

Smokers will
have to pay 82c more for a packet of 20 cigarettes. Last year the increase was
68c per packet. Pipe tobacco will be 26c more for 25g, also a much steeper rise
than last year's 9c.

But while
drinkers have also been hit with increases, they are generally lower than those
of last year. A 340ml can will cost 7c more (9c last year), a bottle of wine
(750ml) 19c more (27c last year), spirits R3.77 more (R4.76 last year) and
sparkling wine 48c more (62c last year).

Since 2002,
tax rates on alcoholic beverages have consistently been raised above inflation.
This year's amendments continue this trend, with hikes of between 4.8 per cent
and 7 per cent.

An additional
excise duty category is proposed for grain-based fermented beverages (flavoured
alcoholic beverages using 100 per cent unconverted grains). The rate for these
beverages will initially be linked to the excise duty for beer.

Other reforms
under consideration include providing excise duty relief to wine-based spirits
(eg brandy). The rationale is that brandy is at a cost disadvantage compared with
other forms of alcoholic spirits, because it takes 4-5 litres of wine to
produce a litre of brandy.

Sparkling wine
accounts for a small proportion of alcoholic beverage sales and the nature of
this market results in large price discrepancies. This may require a review of
the way the excise duty on sparkling wine is calculated, according to the
Budget Review.

Government
proposes a change in the way the targeted tax burden on alcoholic beverages and
tobacco products is expressed. VAT will be removed from the calculation and, as
a result, the excise tax burden for wine, beer and spirits will henceforth be
11 per cent, 23 per cent and 36 per cent, excluding VAT and rounded to the
nearest whole number.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.